Yesterday, the New Jersey Appellate Division affirmed the rejection of a public owner’s award of a $7.2 million contract on the basis that the public owner should have waived the defect associated with a mandatory document in the lowest bidder’s response to the solicitation.  Thassian Mech. Contr. v. E. Brunswick Bd. of Educ., 2012 N.J. Super. Unpub. LEXIS 27 (App. Div. Jan. 6. 2020). 

The case arises from the public owner’s solicitation of new bids for an HVAC contract after having previously rejected all bids submitted in response to its initial solicitation.  Upon receiving the re-bid responses, the public owner rejected the two lowest bids because of material defects contained therein and awarded the contract to the third lowest bidder.  Specifically, the two lowest bidders – both of whom submitted responses to the initial solicitation – used the sworn subcontractor certifications submitted in response to the initial solicitation in their responses to the re-bid.  Based on that error, the public owner rejected both bidder’s responses, stating:

N.J.S.A. 18A:7G-37 provides that a prequalified contractor and any qualified subcontractors required to be named shall submit, as a condition of bidding, a sworn contractor certification.  [Plaintiff’s] subcontractors submitted the certifications for a prior bid, Bid #2020-01, and not Bid #2020-06.  As the proper forms were not submitted, [plaintiff’s] bid must be rejected. 

In an action brought by the lowest bidder, the trial court vacated the public owner’s rejection of the lowest bidder’s bid and determined that the lowest bidder should have been awarded the contract. 

On appeal, the Appellate Division affirmed.  In doing so, the Appellate Division agreed that the lowest bidder’s re-use of subcontractor certifications did not deprive the public owner of assurances because the subcontractor certifications were “essentially identical and approximately three weeks apart.”  The court further noted that non-compliance “could easily be waived because every representation sworn to by the subcontractors [is] independently verifiable and supported by additional documents submit[ed] in the bid.” 

The Appellate Division also upheld the trial court’s decision that the submission of subcontractors’ prior sworn certifications “did not in any way influence” the lowest bidder’s bid.  While the Appellate Division did not analyze this factor at length, it agreed that doing so did not “place bidders on uneven footing.”  The Appellate Division further noted that this type of defect should not deprive the taxpayers of the savings derived from the lowest bidder’s price.

This decision confirms that courts will not hesitate to override a public owner’s contracting decisions in those circumstances where the owner’s decision is deemed to have been arbitrary, capricious, unreasonable and not supported by substantial credible evidence.   In addition, the unique facts of the case reveal that there exists some flexibility for wavier of defects even in statutorily required documents.